Growth of beedi a great source for taxation to enhance State revenue

• Social Development Network calls for better regulation to control under-aged smoking via beedi

There is need for greater regulation and control of the beedi industry to prevent under-aged smoking and enhance revenue to the State, finds a report released by the Social Development Network (SDN), which adds that the beedi trade can no longer be considered a cottage industry given its extent and reach.  

A survey carried out by the not-for-profit organisation estimates over 2.5 billion sticks of beedi to be manufactured annually, employing 8,000 families islandwide. This translates to a consumer spend of Rs. 12.5 billion annually on beedi, demonstrating the potential for additional revenue to the Government in the form of tax. 

Currently, there is no tax on beedis at the point of sale, and the only levy incurred is during the import of tendu leaf used for manufacturing beedi. At Rs. 5a stick, beedis are considerably cheaper than cigarettes, and the addition of a mere Rs. 3would yield the Government over Rs. 7.5 billion in additional revenue. 

However, a much larger concern is the lack of governance and control on the industry and its points of sale. With little or no restrictions governing its sale, SDN encountered many instances of retailers admitting selling beedis to minors, who claim to shuttle sticks for adults. However, at just Rs. 5a stick and no monitoring by authorities, beedis are easily accessible to students who want to have their first taste of smoking and poses a grave threat to future generations and the Government’s objectives to control smoking. 

In addition, SDN, an organisation that works towards the empowerment of women and children’s rights, asserts that greater attention must be paid on women involved in the trade and the question of family labour involving children in the tobacco trade. 

“There are over 8,000 families involved in manufacturing beedi, and more than 95% of them are women. However, they are not covered by any form of contract or health and safety standards, and 8,000 forms a significant number of our workforce. We are also concerned at involving children in the tobacco trade; many families had children of school-going age supporting their parents in rolling beedi. Whilst we do accept that family labour is an essential part of lower income groups and agriculture, their involvement in the tobacco trade must be controlled,” SDN President JeewaSiriwardena said.

SDN in its report suggests to bring beedi under the same stringent regulation and focus similar to cigarettes at the point-of-sale to prevent ease-of-access to minors to control under-aged smoking, plus for the Government to urgently consider governance surrounding employment of children as family-labourin the industry and to consider revised levies and pricing to make beedis less affordable to minors. 

Whilst enhancing rate of cess on tendu imports would prove a straightforward approach, continued and enhanced widespread smuggling of tendu leaf could render this effort counterproductive. Introduction of tax at the point of sale will bring greater revenues, plus, serve as a barrier to under-aged smoking. However, this would prove difficult to monitor and control under the existing mechanism. 

Customs officials told SDN that large quantities of tenduleaf – and possibly even finished beedi sticks – are brought into the country illegally, sometimes hand-carried through the airport or even via fishing boats off seas in the northern region, and likely to consist of much larger volumes than what is declared and imported through Customs. 

“In every country and for every Customs operation, there are certain goods that fall under priority for detection and control and some others that do not, whereby we pay little attention to them. Beedi falls into the latter category. So, whilst detections and action dotake place, it is not a category we follow aggressively,” the officials added. 

Social Development Network (SDN) is a not-for-profit voluntary organisation comprising of retired government servants, students and volunteers engaging in philanthropy, social development and empowerment of women and children islandwide. 

Having engaged in community upliftment through philanthropy at the outset, SDN set about gathering economic and social data to produce draft policy proposals to support further meaningful fact-based long-term development activity, for itself and Government or other non-Government agencies. It aims to promote action and policy to support development in underprivileged communities, especially women.